Water system would cost $184.5M, company tells Hingham

If Hingham decides to take over the area's privately owned water system, Aquarion Water Company says the town should be prepared to cough up $184.5 million.

By Neal Simpson

The Patriot Ledger, Quincy, MA

By Neal Simpson

Posted Jul. 11, 2012 at 12:01 AM
Updated Jul 11, 2012 at 11:23 AM

By Neal Simpson

Posted Jul. 11, 2012 at 12:01 AM
Updated Jul 11, 2012 at 11:23 AM

HINGHAM

» Social News

HINGHAM – If Hingham decides to take over the area's privately owned water system, Aquarion Water Company says the town should be prepared to cough up $184.5 million.

The Connecticut-based company released a pair of reports today outlining the estimated “price” of a system that provides water for as many as 45,000 people, though company officials maintain it is not for sale. The prices were determined using a formula in an 1879 charter that gives Hingham the right to buy the system.

“We’re hoping that people see this number and see that it’s an awful lot of money to spend to get what they already have,” said Harry Hibbard, a Hull resident who serves as the company’s vice president of operations.

Selectman Bruce Rabuffo, who sits on a town committee study the feasibility of buying the system, said he had “questions” about the estimate, but declined to comment further until the committee could review the information. Aquarion provided the reports to the town on July 2 and scheduled a public meeting to present the findings on Wednesday night.

In its reports, Aquarion has laid out three ways the town could seek to acquire the system, including a total takeover that would cost $184.5 million. The other two scenarios consider different ways the town could acquire a water treatment plant on Main Street, which was built in 1996 by American Water Company, the predecessor to Aquarion.

Under a scenario suggested by selectmen at town meeting in April, the town could purchase the entire water system except for the plant, which it would lease from a subsidiary of Aquarion that now owns it. The company estimated that the town could buy the system, excluding the plant, for $84.3 million and lease the plant from 2013 to 2035 for a total of $97 million.

But Aquarion officials warned that the town would not own the plant at the end of the lease and would not have the right to buy it.

“We really don’t think that’s going to be much of an attractive option for them,” said Joe Connor, a lawyer representing the company.

Under another scenario, the town could buy the system, excluding the plant, for $84.3 and then take the plant by eminent domain, rather than under the charter formula, for $60.8 million. The arrangement would lower the total purchase cost to $145.1 million, but Aquarion officials said the company would likely oppose it in court because they believe the 1879 charter formula should apply to all its South Shore assets, including those owned by its subsidiaries.

The reports do not address how much it would cost the town to begin operating the system after it acquires it or how much of the purchasing costs would be passed on to customers. A town study committee is preparing to answer those questions.

Page 2 of 2 - Hingham voters at April’s town meeting allocated $320,000 to study the feasibility of acquiring and operating the Aquarion water system, which also serves residents in Hull and north Cohasset. Rabuffo said the committee has spent very little of the money and is only beginning its study.

“We haven’t seen anything that says stop,” he said. “This will take a little while.”

Aquarion officials have said repeatedly that its water system is “not for sale” and have refused to rule out legal action if the town attempts a take over. The company is now engaged in a protracted legal battle with Oxford, a central Massachusetts town that is also trying to buy its water system from Aquarion.

Hingham selectmen began talking about the possibility of acquiring the water system last year while the town was engaged in a rate dispute with Aquarion before the Department of Public Utilities, which sets rates for all privately owned water utilities in the state. The department eventually approved a rate hike of 10 percent.